[miningmx.com] — SEKOKO Resources has said it was negotiating a “significantly improved’ offtake agreement with Eskom, after the parties had called off a deal concluded at the beginning of 2011.
The company announced in February last year it had signed a memorandum of understanding with the power utility to provide 525,000 tonnes of coal per year for six years to the Matimba power station.
The takeoff agreement was supposed to commence in April this year. At the time, Sekoko also clinched a R250m financing deal with the Industrial Development Corporation for the development of its Waterberg coal project.
Chairperson Timothy Tebeila and CEO Jan Britz told Miningmx on Wednesday Sekoko had decided to change the project’s scale and mining plan.
“That (first) deal was not sufficient to get the finance we needed,’ said Tebeila.
Britz told Miningmx the company was now working on a reconfigured bank feasibility study, with first production planned for 2014, ramping up to annual sales of 10 million tonnes (Mt) by 2019. The project has a 5 billion tonnes resource base.
Tebeila said Sekoko was still negotiating to bring a strategic partner on board, after earlier talks with both Jindal Steel and Coal India had failed. He didn’t want to divulge what percentage of production would be earmarked for offtake by Eskom, as the MoU was still being negotiated.
“It will be quite a significant improvement on the previous contract,’ he said, adding that Sekoko expected to make an announcement on this and a strategic partnership within the next month or two.
“All the holes are lined up,’ Britz said. “We’re not in limbo; we’re up and running.
“It is a matter of weeks before we’ll have a lot to communicate.’
Sekoko’s joint venture partner for the Waterberg coal project is JSE and ASX-listed Firestone Energy. Firestone’s share price have languished in recent months and fell from a high of 37c in January 2011 to its current lows of around 9c.
Tebeila was appointed chairperson of Firestone in December. Asked whether Sekoko and Firestone were moving towards a single corporate structure – Firestone has no assets or operations other than its share in the Waterberg project – Tebeila declined to comment, but did say the two companies were working on a restructuring.
Britz said Sekoko would in 2012 also submit mining right applications for the company’s Tuli coking coal project, which is close to Coal of Africa’s Vele Colliery, as well as its Capricorn iron ore project. He dismissed concerns that Sekoko would face the same challenges over environmental concerns which CoAL had to deal with at Vele, saying the project was located 48km’s away from the Mapungubwe World Heritage Site.
“We’ll do everything by the book,’ Britz said. “I think we all have learnt a lot of lessons on how to approach this.’
